fgc_ex1027-80811.htm


    EXHIBIT 10.27


    


    


    NOTE
AND WARRANT PURCHASE

    


    AGREEMENT

     

    Dated
as of August 7, 2008

     

    by
and between

     

    FIRSTGOLD
CORP.,

     

    PLATINUM
LONG TERM GROWTH, LLC

     

    and


    


    LAKEWOOD
GROUP LLC

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

         

        
          Table
of Contents

        

        
        

         

        
          	 	
                  Page

                
	 	 
	ARTICLE I    PURCHASE AND SALE OF
      NOTE AND WARRANT	
                  1

                
	
                      Section
      1.1

                	Purchase and Sale of Note and Warrant	
                  1

                
	
                      Section
      1.2

                	Closing	
                  3

                
	
                      Section
      1.3

                	Warrant Shares	
                  4

                
	 	 	 
	ARTICLE
      II    REPRESENTATIONS AND
      WARRANTIES	
                  4

                
	
                      Section
      2.1

                	Representations and Warranties of the Company.	
                  4

                
	
                      Section
      2.2

                	Representations and Warranties of the Lenders	
                  14

                
	 	 	
                   

                
	ARTICLE
      III    COVENANTS	
                  15

                
	
                      Section
      3.1

                	Securities Compliance	
                  15

                
	
                      Section
      3.2

                	Registration and Listing	
                  16

                
	
                      Section
      3.3

                	Compliance with Laws	
                  16

                
	
                      Section
      3.4

                	Keeping of Records and Books of Account	
                  16

                
	
                      Section
      3.5

                	Reporting Requirements	
                  16

                
	
                      Section
      3.6

                	Other
      Agreements	
                  17

                
	
                      Section
      3.7

                	Use of
      Proceeds	
                  17

                
	
                      Section
      3.8

                	Reporting Status	
                  17

                
	
                      Section
      3.9

                	Disclosure of Transaction	
                  17

                
	
                      Section
      3.10 

                	Disclosure of Material Information	
                  17

                
	
                      Section
      3.11

                	Pledge of Securities	
                  18

                
	
                      Section
      3.12

                	Amendments	
                  18

                
	
                      Section
      3.13

                	Distributions	
                  18

                
	
                      Section
      3.14

                	Reservation of Shares	
                  18

                
	
                      Section
      3.15 

                	Prohibition on Liens	
                  19

                
	
                      Section
      3.16 

                	Prohibition on Indebtedness	
                  19

                
	
                      Section
      3.17 

                	Compliance with Transaction Documents	
                  20

                
	
                      Section
      3.18 

                	Compliance with Law	
                  20

                
	
                      Section
      3.19 

                	Transactions with Affiliates	
                  20

                
	
                      Section
      3.20 

                	No
      Dividends or Equity Transactions	
                  20

                
	
                      Section
      3.21 

                	No
      Merger or Sale of Assets; No Formation of Subsidiaries	
                  20

                
	
                      Section
      3.22 

                	Payment of Taxes, Etc	
                  21

                
	
                      Section
      3.23 

                	Corporate Existence	
                  21

                
	
                      Section
      3.24 

                	Investment Company Act	
                  21

                
	
                      Section
      3.25 

                	Maintenance of Assets	
                  21

                
	
                      Section
      3.26 

                	No
      Investments	
                  22

                
	
                      Section
      3.27 

                	Opinions	
                  22

                
	
                      Section
      3.28 

                	Acquisition of Assets	
                  22

                
	
                      Section
      3.29 

                	Registration Rights	
                  22

                
	
                      Section
      3.30 

                	Delivery of Off–Take Agreement	
                  23

                
	
                      Section
      3.31 

                	Notices of Certain Events	
                  23

                
	
                      Section
      3.32 

                	Indebtedness to Affiliates	
                  23

                
	
                      Section
      3.33 

                	Management	
                  23

                


        

         

      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
         

        
        

         

        
          	ARTICLE IV    CONDITIONS	
                  23

                
	
                      Section
      4.1

                	Conditions Precedent to the Obligation of the Company to Close
      and to Sell the Securities at Each Closing	
                  23

                
	
                      Section
      4.2

                	Conditions Precedent to the Obligation of the Lenders to Close
      at Each Closing	
                  24

                
	 	 	 
	ARTICLE
      V    CERTIFICATE
      LEGEND	
                  27

                
	
                      Section
      5.1

                	Legend	
                  27

                
	 	 	 
	ARTICLE
      VI    INDEMNIFICATION	
                  27

                
	
                      Section
      6.1

                	General Indemnity	
                  27

                
	
                      Section
      6.2

                	Indemnification Procedure	
                  28

                
	 	 	
                
	ARTICLE
      VII    MISCELLANEOUS	
                  29

                
	
                      Section
      7.1

                	Fees
      and Expenses	
                  29

                
	    Section
      7.2	Specific Performance; Consent to Jurisdiction;
    Venue	
                  29

                
	    Section
      7.3	Intent
      to Limit Changes to Maximum Lawful Rights	
                  29

                
	    Section
      7.4	Entire
      Agreement; Amendment	
                  30

                
	    Section
      7.5	Notices	
                  30

                
	    Section
      7.6	Waivers	
                  31

                
	
                      Section
      7.7

                	Headings	
                  31

                
	
                      Section
      7.8

                	Successors and Assigns	
                  31

                
	
                      Section
      7.9

                	No
      Third Party Beneficiaries	
                  32

                
	
                      Section
      7.10

                	Governing
      Law	
                  32

                
	
                      Section
      7.11

                	Survival	
                  32

                
	
                      Section
      7.12

                	Publicity	
                  32

                
	
                      Section
      7.13 

                	Counterparts	
                  32

                
	
                      Section
      7.14 

                	Severability	
                  32

                
	
                      Section
      7.15 

                	Further Assurances	
                  33

                


        

         

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    NOTE
AND WARRANT PURCHASE AGREEMENT

     

    This NOTE
AND WARRANT PURCHASE AGREEMENT, dated as of August 7, 2008 (this “Agreement”), is by
and between Firstgold Corp., a Delaware corporation (the “Company”), Platinum
Long Term Growth, LLC, a Delaware limited liability company (“Platinum”), and
Lakewood Group LLC, a Delaware limited liability company (“Lakewood,” and each
of Platinum and Lakewood, individually sometimes referred to as a “Lender,” and
collectively referred to as the “Lenders”).

     

    The
parties hereto agree as follows:

     

    ARTICLE
I

     

    PURCHASE
AND SALE OF NOTE AND WARRANT

     

    Section 1.1    Purchase and Sale of Note
and Warrant.

     

    (a)    Upon the
following terms and conditions, the Company shall issue and sell to Platinum and
Lakewood, and Platinum and Lakewood shall purchase from the Company, (i) senior
secured promissory notes in an aggregate principal amount of up to $15,750,000
(in the amounts set forth in this Section 1.1) and (ii) common stock purchase
warrants, in substantially the form attached hereto as Exhibit A
(individually, a “Warrant,” and
collectively, the “Warrants”), to
purchase shares of Common Stock, par value $0.001 per share, of the Company (the
“Common Stock”)
at the exercise price and upon the terms and conditions set forth
therein.  The Notes shall be original issue discount Notes, each
reflecting an original issue discount of 15%. Each Lender shall purchase its Pro
Rata Share of Notes and Warrants at each Closing. For purposes of this
Agreement, “Pro Rata
Share” shall mean (i) with respect to Platinum, 80% and (ii) with respect
to Lakewood, 20%.

     

    (b)    At the
First Closing (as hereafter defined), upon satisfaction of the terms and
conditions set forth herein, the Company shall issue to Platinum and Lakewood
promissory notes, substantially in the form of Exhibit A-1 hereto
(the “Initial
Notes”), in the principal amounts of Five Million Three Hundred
Ninety-Four Thousand One Hundred Dollars ($5,394,100) and One Million Three
Hundred Forty-Eight Thousand Five Hundred Twenty-Five Dollars ($1,348,525),
respectively, and Platinum and Lakewood shall advance, as payment in full for
the Initial Notes, the sums of Four Million Three Hundred Sixty-Nine Thousand
Two Hundred Twenty-One Dollars ($4,369,221) and One Million Ninety-Two Thousand
Three Hundred Five Dollars ($1,092,305), respectively, less (i) the original
issue discounts of Eight Hundred Nine Thousand One Hundred Fifteen Dollars
($809,115) and Two Hundred Two Thousand Two Hundred Seventy-Nine Dollars
($202,279), respectively, and (ii) origination fees of Two Hundred Fifteen
Thousand Seven Hundred Sixty-Four Dollars ($215,764) and Fifty-Three Thousand
Nine Hundred Forty-One Dollars ($53,941), respectively.  Each Lender
is further permitted to deduct from the advance made on the Closing Date the
fees and expenses of such Lender as permitted by Section 7.1
hereto.  The issuance and sale of the Initial Notes is referred to
herein as the “First
Closing”.  At the First Closing, the Company shall deliver to
each of Platinum and Lakewood the Warrant to purchase 12,000,000 shares and
3,000,000 shares of Common Stock, respectively, at the exercise price and upon
the terms and conditions as set forth therein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)    At the
Second Closing (as hereafter defined), upon satisfaction of the terms and
conditions set forth herein, the Company shall issue to Platinum and Lakewood
promissory notes, substantially in the form of Exhibit A-2 hereto
(the “Second
Notes”), in the principal amounts of Four Million Two Hundred Five
Thousand Nine Hundred Dollars ($4,205,900) and One Million Fifty-One Thousand
Four Hundred Seventy-Five Dollars ($1,051,475), respectively, and Platinum and
Lakewood shall advance, as payment in full for the Second Notes, the sums of
Three Million Four Hundred Six Thousand Seven Hundred Seventy-Nine Dollars
($3,406,779) and Eight Hundred Fifty-One Thousand Six Hundred Ninety-Five
Dollars ($851,695), respectively, less (i) the original issue discounts of Six
Hundred Thirty Thousand Eight Hundred Eighty-Five Dollars ($630,885) and One
Hundred Fifty-Seven Thousand Seven Hundred Twenty-One Dollars ($157,721),
respectively, and (ii) origination fees of One Hundred Sixty-Eight Thousand Two
Hundred Thirty-Seven Dollars ($168,237) and Forty-Two Thousand Fifty-Nine
Dollars ($42,059), respectively (the “Second Closing Origination
Fees”).  The issuance and sale of the Second Notes is referred
to herein as the “Second
Closing”.

     

    (d)    If the
Company has achieved and maintained a production level in excess of 3,000 ounces
of gold per calendar month, upon at least ten (10) business days’ prior written
notice from the Company to Platinum and Lakewood given any time between November
1, 2008 and November 30, 2008, the Company shall issue to Platinum and Lakewood
promissory notes, substantially in the form of Exhibit A-3 hereto
(the “Third
Notes”), in the aggregate principal amount of One Million Dollars
($1,000,000) and Two Hundred Fifty Thousand Dollars ($250,000), respectively,
and Platinum and Lakewood shall advance, as payment in full for the Third Notes,
the sums of Eight Hundred Ten Thousand Dollars ($810,000) and Two Hundred and
Two Thousand Five Hundred Dollars ($202,500), respectively, representing the
principal amounts of each Third Note, less (i) the original issue discounts of
One Hundred Fifty Thousand Dollars ($150,000) and Thirty-Seven Thousand Five
Hundred Dollars ($37,500), respectively, and (ii) origination fees of Forty
Thousand Dollars ($40,000) and Ten Thousand Dollars ($10,000), respectively (the
“Third Closing
Origination Fees”).  The issuance and sale of the Third Notes
is referred to herein as the “Third
Closing”.

     

    (e)    If the
Company has achieved and maintained a production level in excess of 3,000 ounces
of gold per calendar month, upon at least ten (10) business days’ prior written
notice from the Company to Platinum and Lakewood given any time between December
1, 2008 and December 30, 2008, the Company shall issue to Platinum and Lakewood
promissory notes, substantially in the form of Exhibit A-4 hereto
(the “Fourth
Notes”), in the aggregate principal amount of One Million Dollars
($1,000,000) and Two Hundred Fifty Thousand Dollars ($250,000), respectively,
and Platinum and Lakewood shall advance, as payment in full for the Fourth
Notes, the sums of Eight Hundred Ten Thousand Dollars ($810,000) and Two Hundred
and Two Thousand Five Hundred Dollars ($202,500), respectively, representing the
principal amounts of each Fourth Note, less (i) the original issue discounts of
One Hundred Fifty Thousand Dollars ($150,000) and Thirty-Seven Thousand Five
Hundred Dollars ($37,500), respectively, and (ii) origination fees of Forty
Thousand Dollars ($40,000) and Ten Thousand Dollars ($10,000), respectively (the
“Fourth Closing
Origination Fees”).  The issuance and sale of the Fourth Notes
is referred to herein as the “Fourth
Closing”.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (f)    If the
Company has achieved and maintained a production level in excess of 3,000 ounces
of gold per calendar month, upon at least ten (10) business days’ prior written
notice from the Company to Platinum and Lakewood given any time between January
1, 2009 and January 30, 2009, the Company shall issue to Platinum and Lakewood
promissory notes, substantially in the form of Exhibit A-5 hereto
(the “Fifth
Notes” and together with the Initial Notes, the Second Notes, the Third
Notes and the Fourth Notes, the “Notes”), in the
aggregate principal amount of One Million Dollars ($1,000,000) and Two Hundred
Fifty Thousand Dollars ($250,000), respectively, and Platinum and Lakewood shall
advance, as payment in full for the Fifth Notes, the sums of Eight Hundred Ten
Thousand Dollars ($810,000) and Two Hundred and Two Thousand Five Hundred
Dollars ($202,500), respectively, representing the principal amounts of each
Fifth Note, less (i) the original issue discounts of One Hundred Fifty Thousand
Dollars ($150,000) and Thirty-Seven Thousand Five Hundred Dollars ($37,500),
respectively, and (ii) origination fees of Forty Thousand Dollars ($40,000) and
Ten Thousand Dollars ($10,000), respectively (the “Fifth Closing Origination
Fees” and, together with the Second Closing Origination Fees, the Third
Closing Origination Fees and the Fourth Closing Origination Fees, the “Subsequent Closing
Origination Fees”).  The issuance and sale of the Fifth Notes
is referred to herein as the “Fifth
Closing”.  The Second Closing, the Third Closing, the Fourth
Closing and the Fifth Closing are each referred to herein as a “Subsequent Closing”
and are collectively referred to herein as the “Subsequent
Closings”.  The First Closing, the Second Closing, the Third
Closing, the Fourth Closing and the Fifth Closing are each referred to herein as
a “Closing” and
are collectively referred to herein as the “Closings”.

     

    (g)    In the
event any Subsequent Closing does not occur (whether as a result of the failure
of the Company to provide notice as set forth herein or the failure of the
Company to satisfy any condition with respect to such Subsequent Closing), the
Company shall pay to the Lenders, within 10 days following the latest date the
Company could otherwise request that the Lenders advance funds pursuant to
Section 1.1(c), (d) or (e), as the case may be, the Subsequent Closing
Origination Fees that would have otherwise been payable to the Lenders in their
respective Pro Rata Share (or as may be deducted by the Lenders from funds
advanced in such Subsequent Closing pursuant to the terms hereof) in connection
with such Subsequent Closing.  The obligation of the Company set forth
in this Section 1.1(f) shall be deemed evidenced by this Agreement and secured
by the collateral as contemplated by the other Transaction Documents (as defined
below).

     

    Section 1.2    Closing.

     

    The First
Closing under this Agreement shall take place on or before August 7, 2008 (the
“Initial Closing
Date”).  Each Closing hereunder shall take place at the offices
of the Platinum, 152 West 57th Street,
4th
Floor, New York, NY 10:00 a.m. New York time; provided, that all of
the conditions set forth in Article IV hereof and applicable to such Closing
shall have been fulfilled or waived in accordance herewith.  At each
Closing, each Lender shall make its applicable advances described in Section 1.1
above by wire transfer of immediately available funds to an account designated
by the Company.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Section 1.3    Warrant
Shares.

     

    The
Company has authorized and has initially reserved and covenants to continue to
reserve, free of preemptive rights and other similar contractual rights of
stockholders, a number of its authorized but unissued shares of Common Stock at
least equal to the aggregate number of shares of Common Stock to effect the
exercise of each Warrant in full.  Any shares of Common Stock issuable
upon exercise of each Warrant (and such shares when issued) are herein referred
to as the “Warrant
Shares”.  The Warrants and the Warrant Shares are sometimes
collectively referred to herein as the “Securities”.

     

    ARTICLE
II

     

    REPRESENTATIONS
AND WARRANTIES

     

    Section 2.1    Representations and
Warranties of the Company.

     

    The
Company hereby represents and warrants to the Lenders, as of the date hereof and
the date of each Closing hereunder (except as set forth on the Schedule of
Exceptions attached hereto with each numbered Schedule corresponding to the
section number herein), as follows:

     

    (a)    Organization, Good Standing
and Power.  The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power to own, lease and operate its properties
and assets and to conduct its business as it is now being
conducted.  The Company does not have any direct or indirect
Subsidiaries (as defined in Section 2.1(g)) or own securities of any kind in any
other entity except as set forth on Schedule 2.1(g)
hereto.  The Company and each such Subsidiary (as defined in Section
2.1(g)) is duly qualified as a foreign corporation, limited liability company or
limited partnership to do business and is in good standing in Nevada and in
every other jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary except for any
jurisdiction(s) (alone or in the aggregate) in which the failure to be so
qualified will not have a Material Adverse Effect.  For the purposes
of this Agreement, “Material Adverse
Effect” means any material adverse effect on the business, operations,
properties, prospects, or financial condition of the Company or any Subsidiary
and/or any condition, circumstance, or situation that would prohibit or
otherwise materially interfere with the ability of the Company to perform any of
its obligations under this Agreement or any of the Transaction Documents in any
material respect.

     

    (b)    Authorization;
Enforcement.  The Company and the Subsidiaries (as applicable)
have the requisite corporate power and authority to enter into and perform this
Agreement, the Notes, the Warrants, the Security Agreement by and among the
Company and the Subsidiaries, on the one hand, and Platinum (as collateral
agent), on the other hand, dated as of the date hereof, substantially in the
form of Exhibit
B attached hereto (the “Security Agreement”)
the Officer’s Certificate to be delivered by the Company, dated as of each
Closing Date, substantially in the form of Exhibit C attached
hereto (the “Officer’s
Certificate”), the Deeds of Trust, Security Agreement and Fixture
Filings, dated as of the Closing Date, from the Company, as Grantor,
substantially in the form attached hereto as Exhibit D (the “Mortgage”), the
Environmental Indemnity Agreement, dated as of the Closing Date, among the
Company and the Lenders, substantially in the form of Exhibit E (the “Environmental Indemnity
Agreement”), the guarantee (“Guarantee”) to be
delivered by each of the Subsidiaries, dated as of the date hereof,
substantially in the form of Exhibit F, the
Irrevocable Transfer Agent Instructions (as defined in Section 3.16 hereof) and
the Off-Take Agreement (as defined in Section 3.28 hereof) (collectively,
together with this Agreement, the Notes and the Warrants the “Transaction
Documents”), and to issue and sell the Securities in accordance with the
terms hereof.  

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated thereby have been
duly and validly authorized by all necessary corporate action, and, except as
set forth on Schedule
2.1(b), no further consent or authorization of the Company, its Board of
Directors, stockholders or any other third party is required.  When
executed and delivered by the Company and the Subsidiaries, each of the
Transaction Documents shall constitute a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, reorganization,
moratorium, liquidation, conservatorship, receivership or similar laws relating
to, or affecting generally the enforcement of, creditor’s rights and remedies or
by other equitable principles of general application.

     

    (c)    Capitalization.  The
authorized capital stock and the issued and outstanding shares of capital stock
of the Company as of the Initial Closing Date is set forth on Schedule 2.1(c)(i)
hereto.  All of the outstanding shares of the Common Stock and any
other outstanding security of the Company have been duly and validly
authorized.  Except as set forth in this Agreement, or as set forth on
Schedule
2.1(c)(ii) hereto, no shares of Common Stock or any other security of the
Company are entitled to preemptive rights or registration rights and there are
no outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the
Company.  Furthermore, except as set forth in this Agreement and as
set forth on Schedule
2.1(c)(iii) hereto, there are no contracts, commitments, understandings,
or arrangements by which the Company is or may become bound to issue additional
shares of the capital stock of the Company or options, securities or rights
convertible into shares of capital stock of the Company.  Except as
provided on Schedule
2.1(c)(iv) hereto, the Company is not a party to or bound by any
agreement or understanding granting registration or anti-dilution rights to any
person with respect to any of its equity or debt securities.  Except
as set forth on Schedule 2.1(c)(v),
the Company is not a party to, and it has no knowledge of, any agreement or
understanding restricting the voting or transfer of any shares of the capital
stock of the Company.

     

    (d)    Issuance of
Securities.  The Notes and the Warrants have been duly
authorized by all necessary corporate action and, when paid for or issued in
accordance with the terms hereof, the Notes shall be validly issued and
outstanding, free and clear of all liens, encumbrances and rights of refusal of
any kind.  When the Warrant Shares are issued and paid for in
accordance with the terms of this Agreement and as set forth in each Warrant,
such shares will be duly authorized by all necessary corporate action and
validly issued and outstanding, fully paid and nonassessable, free and clear of
all liens, encumbrances and rights of refusal of any kind and the holders shall
be entitled to all rights accorded to a holder of Common Stock.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (e)    No
Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company, the performance by the Company of its
obligations under the Notes and the consummation by the Company and the
Subsidiaries of the transactions contemplated hereby and thereby, and the
issuance of the Securities as contemplated hereby, do not and will not (i)
violate or conflict with any provision of the Company’s Certificate of
Incorporation (the “Certificate of
Incorporation”) or Bylaws (the “Bylaws”), each as
amended to date, or any Subsidiary’s comparable charter documents, (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries’ respective properties or assets are bound,
(iii) result in a violation of any federal, state, local or foreign statute,
rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries are bound or affected, or (iv) create or impose a lien, mortgage,
security interest, charge or encumbrance of any nature on any property or asset
of the Company or its Subsidiaries under any agreement or under any commitment
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound or by which any of their respective
properties or assets are bound, except, in all cases, for such conflicts,
defaults, terminations, amendments, acceleration, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect
(other than violations pursuant to clauses (i) or (iii) (with respect to federal
and state securities laws)).  Neither the Company nor any of its
Subsidiaries is required under federal, state, foreign or local law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under the Transaction
Documents or issue and sell the Securities in accordance with the terms hereof
(other than any filings, consents and approvals which may be required to be made
by the Company under applicable state and federal securities laws, rules or
regulations).  The business of the Company and its Subsidiaries is not
being conducted in violation of any laws, ordinances or regulations of any
governmental entity.

     

    (f)    Commission Documents,
Financial Statements.  The Common Stock of the Company is
registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and
the Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Securities and Exchange Commission
(the “Commission”) pursuant
to the reporting requirements of the Exchange Act (all of the foregoing
including filings incorporated by reference therein being referred to herein as
the “Commission
Documents”).  Each Commission Document complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the Commission promulgated thereunder and other federal, state and local
laws, rules and regulations applicable to such documents, and the Commission
Documents do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.  As of their respective dates, the financial
statements of the Company included in the Commission Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission or other applicable rules and
regulations with respect thereto.  Such financial statements have been
prepared in accordance with generally accepted accounting principles (“GAAP”) applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the financial position of the Company and its Subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (g)    Subsidiaries.  Schedule 2.1(g)
hereto sets forth each Subsidiary of the Company, showing the jurisdiction of
its incorporation or organization and showing the percentage of each person’s
ownership of the outstanding stock or other interests of such
Subsidiary.  For the purposes of this Agreement, “Subsidiary” shall
mean any corporation or other entity of which at least 50% of the securities or
other ownership interest having ordinary voting power (absolutely or
contingently) for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the Company and/or any
of its other Subsidiaries.  All of the outstanding shares of capital
stock of each Subsidiary have been duly authorized and validly issued, and are
fully paid and nonassessable.  Except as set forth on Schedule 2.1(g)
hereto, there are no outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by or binding upon any
Subsidiary for the purchase or acquisition of any shares of capital stock of any
Subsidiary or any other securities convertible into, exchangeable for or
evidencing the rights to subscribe for any shares of such capital
stock.  Neither the Company nor any Subsidiary is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of the capital stock of any Subsidiary or any convertible
securities, rights, warrants or options of the type described in the preceding
sentence except as set forth on Schedule 2.1(g)
hereto.  Neither the Company nor any Subsidiary is party to, nor has
any knowledge of, any agreement restricting the voting or transfer of any shares
of the capital stock of any Subsidiary.  Each Subsidiary is duly
organized, validly existing and in good standing under the laws of the
jurisdictions set forth on Schedule 2.1(g) and
has the requisite corporate or other power to own, lease and operate its
properties and assets and to conduct its business as it is now being
conducted.

     

    (h)    No Material Adverse
Change.  Since January 31, 2008, the Company has not
experienced or suffered any Material Adverse Effect.

     

    (i)    No Undisclosed
Liabilities.  Except as disclosed on Schedule 2.1(i)
hereto, since January 31, 2008, neither the Company nor any of its Subsidiaries
has incurred any liabilities, obligations, claims or losses (whether liquidated
or unliquidated, secured or unsecured, absolute, accrued, contingent or
otherwise) other than those incurred in the ordinary course of the Company’s or
its Subsidiaries respective businesses or which, individually or in the
aggregate, are not reasonably likely to have a Material Adverse
Effect.

     

    (j)    No Undisclosed Events or
Circumstances.  Since January 31, 2008, except as disclosed on
Schedule 2.1(j)
hereto, no event or circumstance has occurred or exists with respect to the
Company or its Subsidiaries or their respective businesses, properties,
prospects, operations or financial condition, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (k)    Indebtedness.  Schedule 2.1(k)
hereto sets forth as of the date hereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the Company or any
Subsidiary has, or after the date hereof expects to have,
commitments.  For the purposes of this Agreement, “Indebtedness” shall
mean  (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers
acceptances, current swap agreements, interest rate hedging agreements, interest
rate swaps, or other financial products, (c) all capital lease obligations that
exceed $10,000 in the aggregate in any fiscal year, (d) all obligations or
liabilities secured by a lien or encumbrance on any asset of the Company,
irrespective of whether such obligation or liability is assumed, (e) all
obligations for the deferred purchase price of assets, together with trade debt
and other accounts payable that exceed $10,000 in the aggregate in any fiscal
year, (f) all synthetic leases, and (g) any obligation guaranteeing or intended
to guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted or sold with recourse) any of the foregoing obligations of any other
person; provided, however, Indebtedness shall not include (I) usual and
customary trade debt incurred in the ordinary course of business and (II)
endorsements for collection or deposit in the ordinary course of
business.  Neither the Company nor any Subsidiary is in default with
respect to any Indebtedness.

     

    (l)    Title to
Assets.  Each of the Company  and the Subsidiaries
has good and valid title to all of its real and personal property reflected in
the Commission Documents, free and clear of any mortgages, pledges, charges,
liens, security interests or other encumbrances, except for those indicated on
Schedule 2.1(l)
hereto.  Any leases of the Company and each of its Subsidiaries are
valid and subsisting and in full force and effect. The Company and its
Subsidiaries has each complied in all respects with the terms of each of the
leases described on Schedule 2.1(l)
hereto, and has not received notice that it has failed to so comply from any
applicable lessor. Pursuant to, and upon execution and delivery of, the Security
Agreement and the Mortgage, the Company and its Subsidiaries shall have granted
to the Lenders a perfected, first priority security interest in substantially
all of the assets of the Company and the Subsidiaries.  Without
limiting the generality of the foregoing, the Company has good and valid title
to the mining claims described on Schedule 2.1(l)
hereto, subject only to the paramount title of the United States and the
requirement for discovery of minerals, and the Company is aware of no dispute or
challenge to such claims; such claims are valid under the mining laws of the
United States and the State of Nevada, and the Company has timely paid all fees,
assessments and other amounts due the State of Nevada and United States with
respect to such claims.

     

    (m)    Actions
Pending.  There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or other proceeding pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary which questions the validity of this Agreement or any of the other
Transaction Documents or any of the transactions contemplated hereby or thereby
or any action taken or to be taken pursuant hereto or thereto.  Except
as set forth on Schedule 2.1(m)
hereto, there is no action, suit, claim, investigation, arbitration, alternate
dispute resolution proceeding or other proceeding pending or, to the knowledge
of the Company, threatened against or involving the Company, any Subsidiary or
any of their respective properties or assets, which individually or in the
aggregate, would reasonably be expected, if adversely determined, to have a
Material Adverse Effect.  There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any Subsidiary or any officers or
directors of the Company or Subsidiary in their capacities as such, which
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (n)    Compliance with
Law.  The business of the Company and the Subsidiaries has been
and is presently being conducted in accordance with all applicable federal,
state and local governmental laws, rules, regulations and ordinances, except
such that, individually or in the aggregate, the noncompliance therewith could
not reasonably be expected to have a Material Adverse Effect.  The
Company and each of its Subsidiaries have all franchises, permits, licenses,
consents and other governmental or regulatory authorizations and approvals
necessary for the conduct of its business as now being conducted by it unless
the failure to possess such franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.  Other than the delivery of a bond in the amount of
$2,183,846, the Company has all franchises, permits, licenses, consents and
other governmental or regulatory authorizations and approvals necessary to
conduct mining operations at the “Relief Canyon” mine described in the
Commission Documents.

     

    (o)    Taxes.  The
Company and each of the Subsidiaries has accurately prepared and filed all
federal, state and other tax returns required by law to be filed by it, has paid
or made provisions for the payment of all taxes shown to be due and all
additional assessments, and adequate provisions have been and are reflected in
the financial statements of the Company and the Subsidiaries for all current
taxes and other charges to which the Company or any Subsidiary is subject and
which are not currently due and payable.  Except as disclosed on Schedule 2.1(o)
hereto, none of the federal income tax returns of the Company or any Subsidiary
have been audited by the Internal Revenue Service.  The Company has no
knowledge of any additional assessments, adjustments or contingent tax liability
(whether federal or state) of any nature whatsoever, whether pending or
threatened against the Company or any Subsidiary for any period, nor of any
basis for any such assessment, adjustment or contingency.

     

    (p)    Disclosure.  Except
for the transactions contemplated by this Agreement, the Company confirms that
neither it nor any other person acting on its behalf has provided the Lenders or
their agents or counsel with any information that constitutes or might
constitute material, nonpublic information.  To the best of the
Company’s knowledge, neither this Agreement or the Schedules hereto nor any
other documents, certificates or instruments furnished to the Lenders by or on
behalf of the Company or any Subsidiary in connection with the transactions
contemplated by this Agreement contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made
herein or therein, in the light of the circumstances under which they were made
herein or therein, not misleading.

     

    (q)    Environmental
Compliance.  The Company and each of its Subsidiaries have
obtained all material approvals, authorization, certificates, consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under
any  Environmental Laws.  “Environmental Laws”
shall mean all applicable laws relating to the protection of the environment
including, without limitation, all requirements pertaining to reporting,
licensing, permitting, controlling, investigating or remediating emissions,
discharges, releases or threatened releases of hazardous substances, chemical
substances, pollutants, contaminants or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
material or wastes, whether solid, liquid or gaseous in
nature.  

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    The
Company has all necessary governmental approvals required under all
Environmental Laws as necessary for the Company’s business or the business of
any of its subsidiaries.  To the best of the Company’s knowledge, the
Company and each of its subsidiaries are also in compliance with all other
limitations, restrictions, conditions, standards, requirements, schedules and
timetables required or imposed under all Environmental Laws.  Except
for such instances as would not individually or in the aggregate have a Material
Adverse Effect, there are no past or present events, conditions, circumstances,
incidents, actions or omissions relating to or in any way affecting the Company
or its Subsidiaries that violate or may violate any Environmental Law after the
date hereof or that may give rise to any environmental liability, or otherwise
form the basis of any claim, action, demand, suit, proceeding, hearing, study or
investigation (i) under any Environmental Law, or (ii) based on or related to
the manufacture, processing, distribution, use, treatment, storage (including
without limitation underground storage tanks), disposal, transport or handling,
or the emission, discharge, release or threatened release of any hazardous
substance.

     

    (r)    Books and Records; Internal
Accounting Controls.  The records and documents of the Company
and its Subsidiaries accurately reflect in all material respects the information
relating to the business of the Company and its Subsidiaries, the location and
collection of their assets, and the nature of all transactions giving rise to
the obligations or accounts receivable of the Company or any Subsidiary. The
Company is in material compliance with all provisions of the Sarbanes-Oxley Act
of 2002 which are applicable to it as of the applicable Closing Date. The
Company and its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that information required to be disclosed by the Company in the
reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms. The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the period covered by the Company’s most recently filed periodic report under
the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the effectiveness
of the disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no changes in the
Company’s internal control over financial reporting (as such term is defined in
the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.

     

    
      
        
        

      

      
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    (s)    Material
Agreements.  The Company and each of its Subsidiaries have
performed all obligations required to be performed by them to date under any
written or oral contract, instrument, agreement, commitment, obligation, plan or
arrangement, filed or required to be filed with the Commission (the “Material
Agreements”).  Neither the Company nor any of its Subsidiaries
has received any notice of default under any Material
Agreement.  Neither the Company nor any of its Subsidiaries is in
default under any Material Agreement now in effect.

     

    (t)    Transactions with
Affiliates.  Except as set forth on Schedule 2.1(t)
hereto and in the Commission Documents, there are no loans, leases, agreements,
contracts, royalty agreements, management contracts or arrangements or other
continuing transactions between (a) the Company, any Subsidiary or any of their
respective customers or suppliers on the one hand, and (b) on the other hand,
any officer, employee, consultant or director of the Company, or any of its
Subsidiaries, or any person owning at least 5% of the outstanding capital stock
of the Company or any Subsidiary or any member of the immediate family of such
officer, employee, consultant, director or stockholder or any corporation or
other entity controlled by such officer, employee, consultant, director or
stockholder, or a member of the immediate family of such officer, employee,
consultant, director or stockholder which, in each case, is required to be
disclosed in the Commission Documents or in the Company’s most recently filed
definitive proxy statement on Schedule 14A, that is not so disclosed in the
Commission Documents or in such proxy statement.

     

    (u)    Securities Act of
1933.  The Company has complied and will comply with all
applicable federal and state securities laws in connection with the offer,
issuance and sale of the Securities hereunder.  Neither the Company
nor anyone acting on its behalf, directly or indirectly, has or will sell, offer
to sell or solicit offers to buy any of the Securities or similar securities to,
or solicit offers with respect thereto from, or enter into any negotiations
relating thereto with, any person, or has taken or will take any action so as to
bring the issuance and sale of any of the Securities under the registration
provisions of the Securities Act and applicable state securities laws, and
neither the Company nor any of its affiliates, nor any person acting on its or
their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of any of the Securities.  The
Company is not, and has never been, a company described in Rule 144(i)(1) under
the Securities Act, and is a “reporting issuer” as described in Rule 144(c)(1)
under the Securities Act.   Neither the Company, nor any of its
directors, officers or controlling persons, has taken or will, in violation of
applicable law, take, any action designed to or that might reasonably be
expected to cause or result in, or which has constituted, stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the securities issued or issuable in connection with the transactions
contemplated hereunder.

     

    (v)    Employees.  Neither
the Company nor any Subsidiary has any collective bargaining arrangements or
agreements covering any of its employees, except as set forth on Schedule 2.1(v)
hereto.  Except as set forth on Schedule 2.1(v)
hereto, neither the Company nor any Subsidiary has any employment contract,
agreement regarding proprietary information, non-competition agreement,
non-solicitation agreement, confidentiality agreement, or any other similar
contract or restrictive covenant, relating to the right of any officer, employee
or consultant to be employed or engaged by the Company or such Subsidiary
required to be disclosed in the Commission Documents that is not so
disclosed.  No officer, consultant or key employee of the Company or
any Subsidiary whose termination, either individually or in the aggregate, would
be reasonably likely to have a Material Adverse Effect, has terminated or, to
the knowledge of the Company, has any present intention of terminating his or
her employment or engagement with the Company or any Subsidiary.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (w)    Absence of Certain
Developments.  Except as set forth in the Commission Documents
or provided on Schedule 2.1(w)
hereto, since January 31, 2008, neither the Company nor any Subsidiary
has:

     

    (i) issued
any stock, bonds or other corporate securities or any right, options or warrants
with respect thereto;

     

    (ii) borrowed
any amount in excess of $100,000 or incurred or become subject to any other
liabilities in excess of $100,000 (absolute or contingent) except current
liabilities incurred in the ordinary course of business which are comparable in
nature and amount to the current liabilities incurred in the ordinary course of
business during the comparable portion of its prior fiscal year, as adjusted to
reflect the current nature and volume of the business of the Company and its
Subsidiaries;

     

    (iii) discharged
or satisfied any lien or encumbrance in excess of $100,000 or paid any
obligation or liability (absolute or contingent) in excess of $100,000, other
than current liabilities paid in the ordinary course of business;

     

    (iv) declared
or made any payment or distribution of cash or other property to stockholders
with respect to its stock, or purchased or redeemed, or made any agreements so
to purchase or redeem, any shares of its capital stock, in each case in excess
of $50,000 individually or $100,000 in the aggregate;

     

    (v) sold,
assigned or transferred any other tangible assets, or canceled any debts or
claims, in each case in excess of $100,000, except in the ordinary course of
business;

     

    (vi) sold,
assigned or transferred any patent rights, trademarks, trade names, copyrights,
trade secrets or other intangible assets or intellectual property rights in
excess of $100,000, or disclosed any proprietary confidential information to any
person except to customers in the ordinary course of business;

     

    (vii) suffered
any material losses or waived any rights of material value, whether or not in
the ordinary course of business, or suffered the loss of any material amount of
prospective business;

     

    (viii) made any
changes in employee compensation except in the ordinary course of business and
consistent with past practices;

     

    (ix) made
capital expenditures or commitments therefor that aggregate in excess of
$100,000;

     

    (x) entered
into any material transaction, whether or not in the ordinary course of
business;

     

    
      
        
        

      

      
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    (xi) made
charitable contributions or pledges in excess of $10,000;

     

    (xii) suffered
any material damage, destruction or casualty loss, whether or not covered by
insurance;

     

    (xiii) experienced
any material problems with labor or management in connection with the terms and
conditions of their employment; or

     

    (xiv) entered
into an agreement, written or otherwise, to take any of the foregoing
actions.

     

    (x)    Public Utility Holding
Company Act and Investment Company Act Status.  The Company is
not a “holding company” or a “public utility company” as such terms are defined
in the Public Utility Holding Company Act of 1935, as amended.  The
Company is not, and as a result of and immediately upon the Closing will not be,
an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended (the “Investment Company
Act”).

     

    (y)    ERISA.  No
liability to the Pension Benefit Guaranty Corporation has been incurred with
respect to any Plan by the Company or any of its Subsidiaries which is or would
be materially adverse to the Company and its Subsidiaries.  The
execution and delivery of this Agreement and the issuance and sale of the
Securities will not involve any transaction which is subject to the prohibitions
of Section 406 of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”) or in
connection with which a tax could be imposed pursuant to Section 4975 of the
Internal Revenue Code of 1986, as amended.  As used in this Section
2.1(y), the term “Plan” shall mean an
“employee pension benefit plan” (as defined in Section 3 of ERISA) which is or
has been established or maintained, or to which contributions are or have been
made, by the Company or any Subsidiary or by any trade or business, whether or
not incorporated, which, together with the Company or any Subsidiary, is under
common control, as described in Section 414(b) or (c) of the Code.

     

    (z)    No Integrated
Offering.  Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has directly or indirectly made any
offers or sales of any security or solicited any offers to buy any security
under circumstances that would cause the offering of the Securities pursuant to
this Agreement to be integrated with prior offerings by the Company for purposes
of the Securities Act which would prevent the Company from selling the
Securities pursuant to Regulation D and Rule 506 thereof under the Securities
Act, or any applicable exchange-related stockholder approval provisions, nor
will the Company or any of its affiliates or subsidiaries take any action or
steps that would cause the offering of the Securities to be integrated with
other offerings.  The Company does not have any registration statement
pending before the Commission or currently under the Commission’s review and
except as set forth on Schedule 2.1(z)
hereto, since January 1, 2008, the Company has not offered or sold any of its
equity securities or debt securities convertible into shares of Common
Stock.

     

    (aa)    Dilutive
Effect.  The Company understands and acknowledges that its
obligation to issue the Warrant Shares upon the exercise of the Warrants in
accordance with this Agreement and the respective Warrant, is absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interest of other stockholders of the Company.

     

    
      
        
        

      

      
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    (bb)    DTC
Status.   Except as set forth on Schedule 2.1(bb)
hereto, the Company’s transfer agent is a participant in and the Common Stock is
eligible for transfer pursuant to the Depository Trust Company Automated
Securities Transfer Program.  The name, address, telephone number, fax
number, contact person and email of the Company transfer agent is set forth on
Schedule
2.1(bb) hereto.

     

    (cc)    Governmental
Approvals.  Except for the filing of any notice prior or
subsequent to the Closing that may be required under applicable state and/or
federal securities laws (which if required, shall be filed on a timely basis),
no authorization, consent, approval, license, exemption of, filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for, or in connection with, the execution or delivery of the Notes and the
Warrants, or for the performance by the Company of its obligations under the
Transaction Documents.

     

    (dd)    Operation of
Business.  Except as set forth on Schedule 2.1(dd)
hereto, the Company and each of the Subsidiaries owns or possesses the rights to
all patents, trademarks, domain names (whether or not registered) and any
patentable improvements or copyrightable derivative works thereof, websites and
intellectual property rights relating thereto, service marks, trade names,
copyrights, licenses and authorizations which are necessary for the conduct of
its business as now conducted without infringement or any conflict with the
rights of others.

     

    (ee)    Certain
Fees.  Except as set forth on Schedule 2.1(ee), no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement or the Transaction Documents. The Lenders shall
have no obligation with respect to any fees or with respect to any claims made
by or on behalf of other Persons for fees of a type contemplated by this Section
2.1(ee) that may be due in connection with the transactions contemplated by this
Agreement or the Transaction Documents.

     

    Section 2.2    Representations and
Warranties of the Lenders.

     

    Each of
the Lenders hereby represents and warrants to the Company, severally and not
jointly, as to itself, as of the date hereof and as of the First Closing Date,
as follows:

     

    (a)    Acquisition for
Investment. The Lender is purchasing the Warrant solely for its own
account and not with a view to or for sale in connection with
distribution.  The Lender does not have a present intention to sell
any of the Warrant or the Warrant Shares, nor a present arrangement (whether or
not legally binding) or intention to effect any distribution of any of the
Securities to or through any person or entity; provided, however, that by
making the representations herein, such Lender does not agree to hold the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with Federal and state
securities laws applicable to such disposition. The Lender acknowledges that it
(i) has such knowledge and experience in financial and business matters such
that the Lender is capable of evaluating the merits and risks of the Lender’s
investment in the Company, (ii) is able to bear the financial risks associated
with an investment in the Securities, and (iii) has been given full access to
such records of the Company and the Subsidiaries and to the officers of the
Company and the Subsidiaries as it has deemed necessary or appropriate to
conduct its due diligence investigation.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (b)    Rule
144.  The Lender understands that the Securities must be held
indefinitely unless such Securities are registered under the Securities Act or
an exemption from registration is available.  The Lender acknowledges
that it is familiar with Rule 144 of the rules and regulations of the
Commission, as amended, promulgated pursuant to the Securities Act (“Rule 144”), and that
the Lender has been advised that Rule 144 permits resales only under certain
circumstances.  The Lender understands that to the extent that Rule
144 is not available, it will be unable to sell any Securities without either
registration under the Securities Act or the existence of another exemption from
such registration requirement.

     

    (c)    General.  The
Lender understands that the Securities are being offered and sold in reliance on
a transactional exemption from the registration requirements of federal and
state securities laws, and the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and understandings
of such Lender set forth herein in order to determine the applicability of such
exemptions and the suitability of such Lender to acquire the
Securities.  The Lender understands that no United States federal or
state agency or any government or governmental agency has passed upon or made
any recommendation or endorsement of the Securities.

     

    (d)    Accredited
Investor.  The Lender is an “accredited investor” (as defined
in Rule 501 of Regulation D under the Securities Act), and such Lender has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Securities.  The Lender
is not required to be registered as a broker-dealer under Section 15 of the
Exchange Act and it is not a broker-dealer.  The Lender acknowledges
that an investment in the Securities is speculative and involves a high degree
of risk.

     

    ARTICLE
III

     

    COVENANTS

     

    The
Company covenants with the Lenders as follows, which covenants are for the
benefit of the Lenders and their assignees.  Unless otherwise set
forth in the covenants in this Article III, such covenants shall survive Closing
hereunder until (A) the Notes are paid in full and neither Lender has any
obligation (contingent or otherwise) to advance funds hereunder, and (B) each
Warrant has been redeemed in accordance with its terms and/or exercised in
full.

     

    Section 3.1    Securities
Compliance.

     

    The
Company shall notify the Commission in accordance with its rules and
regulations, of the transactions contemplated by any of the Transaction
Documents and shall take all other necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the legal and
valid issuance of the Notes and the Securities to the Lenders or subsequent
holders.

     

    
      
        
        

      

      
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    Section 3.2    Registration and
Listing.

     

    The
Company shall cause its Common Stock to continue to be registered under Sections
12(b) or 12(g) of the Exchange Act, to comply in all respects with its reporting
and filing obligations under the Exchange Act and any applicable Canadian
securities laws, and to not take any action or file any document (whether or not
permitted by the Securities Act or the rules promulgated thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under the Exchange Act or Securities Act.  The
Company will take all action necessary to continue the listing or trading of its
Common Stock on the OTC Bulletin Board, the Toronto Stock Exchange, the New York
Stock Exchange, the Nasdaq Capital Markets, the Nasdaq Global Markets, the
Nasdaq Global Select Market or the American Stock Exchange.  If
required, the Company will promptly file the “Listing Application” for, or in
connection with, the issuance and delivery of the Warrant
Shares.   Subject to the terms of the Transaction Documents, the
Company further covenants that it will take such further action as the Lenders
may reasonably request, all to the extent required from time to time to enable
the Lenders to sell the Warrant Shares without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144 promulgated
under the Securities Act.  Upon the request of either Lender, the
Company shall deliver to the Lenders a written certification of a duly
authorized officer as to whether it has complied with such
requirements.

     

    Section 3.3    Compliance with
Laws.

     

    The
Company shall comply, and cause each Subsidiary to comply, with all applicable
laws, rules, regulations and orders, noncompliance with which would be
reasonably likely to have a Material Adverse Effect.

     

    Section 3.4    Keeping of Records and Books
of Account.

     

    The
Company shall keep and cause each Subsidiary to keep adequate records and books
of account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the Company and
its Subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.

     

    Section 3.5    Reporting
Requirements.

     

    If the
Company ceases to file its periodic reports with the Commission, or if the
Commission ceases making these periodic reports available via the Internet
without charge, then the Company shall furnish the following to the Lenders so
long as any Lender shall be obligated hereunder to purchase the Notes or shall
beneficially own Notes or Securities:

     

    (a)    Quarterly
Reports filed with the Commission on Form 10-Q as soon as practical after the
document is or would have been required to be filed with the
Commission;

     

    (b)    Annual
Reports filed with the Commission on Form 10-K as soon as practical after the
document is or would have been required to be filed with the
Commission;

     

    
      
        
        

      

      
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    (c)    Current
Reports filed with the Commission on Form 8-K as soon as practical after the
document is or would have been required to be filed with the Commission;
and

     

    (d)    Copies of
all notices, information and proxy statements in connection with any meetings
that are, in each case, provided to holders of shares of Common Stock,
contemporaneously with the delivery of such notices or information to such
holders of Common Stock.

     

    Section 3.6    Other
Agreements.

     

    The
Company shall not enter into any agreement in which the terms of such agreement
would restrict or impair the right or ability to perform of the Company under
any Transaction Document.

     

    Section 3.7    Use of
Proceeds.  

     

    The
proceeds from the sale of the Notes and Warrants hereunder shall be used by the
Company for bonding requirements, general working capital, the repayment of
indebtedness owed to 2171216 Ontario Ltd. and Lender and the costs of this
financing to the Company.  In no event shall the proceeds be used to
redeem any Common Stock or securities convertible, exercisable or exchangeable
into Common Stock or to settle any outstanding litigation.

     

    Section 3.8    Reporting
Status.

     

    So long
as either Lender beneficially owns any of the Notes or Securities, the Company
shall timely file all reports required to be filed with the Commission pursuant
to the Exchange Act and under relevant Canadian securities laws, and the Company
shall not terminate its status as an issuer required to file reports under the
Exchange Act even if the Exchange Act or the rules and regulations thereunder
would permit such termination.

     

    Section 3.9    Disclosure of
Transaction.

     

    The
Company shall issue a press release describing the material terms of the
transactions contemplated hereby (the “Press Release”)
within three Trading Days of the Closing Date.  The Company shall also
file with the Commission a Current Report on Form 8-K (the “Form 8-K”) describing
the material terms of the transactions contemplated hereby as soon as
practicable following the Closing Date but in no event more than three (3)
Trading Days following the Closing Date.  “Trading Day” means
any day during which the principal exchange on which the Common Stock is traded
shall be open for trading.

     

    Section 3.10    Disclosure of Material
Information.

     

    For so
long as either Lender owns any Notes or Securities, the Company covenants and
agrees that neither it nor any other person acting on its behalf has provided or
will provide the Lenders or their agents or counsel with any information that
the Company believes constitutes material non-public information, unless prior
thereto the Lenders shall have executed a written agreement regarding the
confidentiality and use of such information.  The Company understands and
confirms that the Lenders shall be relying on the foregoing representations in
effecting transactions in securities of the Company.  

     

    
      
        
        

      

      
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    In the
event of a breach of the foregoing covenant by the Company, or any of its
Subsidiaries, or any of its or their respective officers, directors, employees
and agents, in addition to any other remedy provided herein or in the
Transaction Documents, the Company shall publicly disclose any material,
non-public information in a Form 8-K within the time periods proscribed by
Regulation FD.  In the event that the Company discloses any material,
non-public information to either Lender and fails to publicly file a Form 8-K in
accordance with the above, such Lender shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such material, nonpublic information without the prior approval by the
Company, its Subsidiaries, or any of its or their respective officers,
directors, employees or agents.  The Lenders shall have no liability
to the Company, its Subsidiaries, or any of its or their respective officers,
directors, employees, stockholders or agents, for any such
disclosure.

     

    Section 3.11    Pledge of
Securities.

     

    The
Company acknowledges that the Securities may be pledged by the Lenders in
connection with a bona fide margin agreement
or other loan or financing arrangement that is secured by the
Securities.  The pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and neither Lender
shall be required to provide the Company with any notice thereof or otherwise
make any delivery to the Company pursuant to this Agreement or any other
Transaction Document. For so long as either Lender owns any Securities, the
Company hereby agrees to execute and deliver such documentation as a pledgee of
the Securities may reasonably request in connection with a pledge of the
Securities to such pledgee by the Lenders.

     

    Section 3.12    Amendments.

     

    The
Company shall not amend or waive any provision of its Certificate of
Incorporation or Bylaws in any way that would adversely affect exercise or other
rights of the holder of the Notes or the Warrants.

     

    Section 3.13    Distributions.

     

    So long
as any Notes remain outstanding, either Lender has any obligation (contingent or
otherwise) to advance funds hereunder, or August 7, 2010, the Company agrees
that it shall not, and shall not permit any Subsidiary to, (i) declare or pay
any dividends or make any distributions to any holder(s) of Common Stock (or
security convertible into or exercisable for Common Stock) or (ii) purchase or
otherwise acquire for value, directly or indirectly, any Common Stock or other
equity security of the Company or any Subsidiary.

     

    Section 3.14    Reservation of
Shares.

     

    So long
as the Warrants remains outstanding, the Company shall take all action necessary
to at all times have authorized and reserved for the purpose of issuance, the
aggregate number of shares of Common Stock needed to provide for the issuance of
the Warrant Shares.

     

    
      
        
        

      

      
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    Section 3.15    Prohibition on
Liens.

     

    So long
as any Notes remain outstanding, either Lender has any obligation (contingent or
otherwise) to advance funds hereunder, or August 7, 2010, other than Permitted
Encumbrances, the Company shall not, and shall not permit its Subsidiaries to,
enter into, create, incur, assume or suffer to exist any liens, security
interests, charges, claims or other encumbrances of any kind (collectively,
“Liens”) on or
with respect to any of its assets now owned or hereafter acquired or any
interest therein or any income or profits therefrom (including, without
limitation, any mining claims or other rights described on Schedule 2.1(l)(ii)
hereto).  “Permitted
Encumbrances” means the individual and collective reference to the
following: (a) Liens for taxes, assessments and other governmental charges or
levies not yet due or Liens for taxes, assessments and other governmental
charges or levies being contested in good faith and by appropriate proceedings
for which adequate reserves (in the good faith judgment of the management of the
Company) have been established in accordance with GAAP; (b) Liens imposed by law
which were incurred in the ordinary course of the Company’s business, such as
carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and
other similar Liens arising in the ordinary course of the Company’s business,
and which (x) do not individually or in the aggregate materially detract from
the value of such property or assets or materially impair the use thereof in the
operation of the business of the Company and its consolidated Subsidiaries or
(y) are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing for the foreseeable future the
forfeiture or sale of the property or asset subject to such Lien; (c) the Liens
set forth in Schedule
3.15 hereto in effect on the date hereof; and (d) Liens on Indebtedness
described in clauses (b) and (c) of Section 3.16 but only of the type and to the
extent permitted by such clauses.

     

    Section 3.16    Prohibition on
Indebtedness.

     

    So long
as any Notes remain outstanding, either Lender has any obligation (contingent or
otherwise) to advance funds hereunder, or August 7, 2010, other than
Indebtedness existing on the date hereof and disclosed in the Schedules to this
Agreement and Permitted Indebtedness, the Company shall not, and shall not
permit any Subsidiary to, enter into, create, incur, assume or suffer to exist
any Indebtedness. “Permitted
Indebtedness” means (a) Indebtedness in an amount not to exceed
$1,000,000 in the aggregate incurred after the date hereof, which Indebtedness
(i) is expressly subordinate in right of payment to the Notes, (ii) does not
mature prior to the date of maturity of the Notes, (iii) does not permit any
payment of principal thereof or interest thereon prior to the payment in full of
the Notes, (iv) shall not be secured by any asset of the Company, (v) is issued
by the Company, (vi) the use of proceeds of which are to provide working capital
to the Company, and (vii) the interest rate of which shall not exceed 10% per
annum, (b) PMSI Indebtedness incurred after the date hereof in the aggregate
outstanding amount not exceeding $500,000 at any one time, (c) Indebtedness in
connection with letters of credit or bonds, which are provided to government
authorities to support drilling or mining operations of the Company, that are
either unsecured or secured solely by cash, (d) the Indebtedness set forth on
Schedule 3.16
hereto existing on the date hereof, and (e) Indebtedness incurred in order to
finance the purchase of certain property pursuant to that certain Land Purchase
Agreement dated December 18, 2007 between the Company and Ronald Ward. “PMSI Indebtedness”
means purchase money security Indebtedness for assets acquired by the Company in
the ordinary course of its businesses to the extent such Indebtedness does not
exceed the fair market value of the assets acquired with the proceeds of such
Indebtedness and such Indebtedness is secured solely by such
assets.

     

    
      
        
        

      

      
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    Section 3.17    Compliance with Transaction
Documents.

     

    The
Company shall, and shall cause its Subsidiaries to, comply with their
respective  obligations under the Notes and the other Transaction
Documents.

     

    Section 3.18    Compliance with
Law.

     

    The
Company shall, and shall cause each of its Subsidiaries to, comply with all
applicable laws, rules and regulations of all federal, state and local
governmental and administrative authorities (including without limitation
environmental laws, rules and regulations), duly observe and conform in all
material respects to all valid requirements of all governmental authorities
relating to the conduct of its business or to its properties or assets, and
obtain and maintain in full force and effect all licenses and permits required
by all applicable governmental authorities to conduct its business and own its
properties and assets.

     

    Section 3.19    Transactions with
Affiliates.

     

    The
Company shall not, and shall not permit its Subsidiaries to, engage in any
transactions with any officer, director, employee or any Affiliate of the
Company or any Subsidiary, including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner, in each
case in excess of $50,000, other than (i) for payment of reasonable salary for
services actually rendered, as approved by the Board of Directors of the Company
as fair in all respects to the Company or the applicable Subsidiary, (ii)
reimbursement for expenses incurred on behalf of the Company or any Subsidiary,
(iii) as set forth on Schedule 3.19 hereof, and (iv) in connection with that
certain Aircraft Time Sharing Agreement dated December 1, 2006 between the
Company and ASD Aviation, Inc. The Company shall not make any payment on any
Indebtedness owed to any of its officers, directors or Affiliates.

     

    Section 3.20    No Dividends or Equity
Transactions.

     

    The
Company shall not, (i) declare or pay any dividends in stock, money or property
to any holder(s) of Common Stock or other equity security of the Company, (ii)
purchase, redeem or otherwise acquire for value, directly or indirectly, any
shares or other equity security of the Company, or (iii) make any Investments
(as defined below).

     

    Section 3.21    No Merger or Sale of Assets;
No Formation of Subsidiaries.

     

    The
Company shall not, without the prior written consent of the Lenders, and shall
not permit any Subsidiary to, (i) merge or consolidate or sell or dispose of all
its assets or any substantial portion thereof (other than inventory in the
ordinary course of business);  (ii) change its name or state or
organization; (iii) commence any liquidation or dissolution; (iv) in any way or
manner alter its organizational structure or effect a change of entity; or (v)
form or create any subsidiary become a partner in any partnership or joint
venture, or make any acquisition of any interest in any Person or acquire
substantially all of the assets of any Person.  “Person” means any
individual, sole proprietorship, joint venture, partnership, corporation,
limited liability company, association, joint-stock company, unincorporated
organization, cooperative, trust, estate, governmental entity or any other
entity of any kind or nature whatsoever.

     

    
      
        
        

      

      
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    Section 3.22    Payment of Taxes,
Etc.

     

    The
Company shall, and shall cause each of its Subsidiaries to, promptly pay and
discharge, or cause to be paid and discharged, when due and payable, all lawful
taxes, assessments and governmental charges or levies imposed upon the income,
profits, property or business of the Company and the Subsidiaries; provided,
however, that any such tax, assessment, charge or levy need not be paid if the
validity thereof shall currently be contested in good faith by appropriate
proceedings and if the Company or such Subsidiaries shall have set aside on its
books adequate reserves with respect thereto, and provided, further, that the
Company and such Subsidiaries will pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any Lien
which may have attached as security therefor.

     

    Section 3.23    Corporate
Existence.

     

    The
Company shall, and shall cause each of its Subsidiaries to, maintain in full
force and effect its corporate existence, rights and franchises and all licenses
and other rights to use property owned or possessed by it and reasonably deemed
to be necessary to the conduct of its business.

     

    Section 3.24    Investment Company
Act.

     

    The
Company shall conduct its businesses in a manner so that it will not become
subject to the Investment Company Act.

     

    Section 3.25    Maintenance of
Assets.

     

    The
Company shall, and shall cause its Subsidiaries to, keep its properties in good
repair, working order and condition, reasonable wear and tear excepted, and from
time to time make all necessary and proper repairs, renewals, replacements,
additions and improvements thereto. The Company shall at all times hold
exclusive and valid mining property rights consisting of no less than 146
unpatented mill site and mining lode claims at the Relief Canyon Mine in
Pershing County, Nevada, not subject to any challenge by any
Person.  The Company shall pay all annual maintenance fees required
with respect thereto at least thirty (30) days prior to the due date hereof and
provide written evidence of such payment to the Lenders at least fifteen (15)
days prior to each respective due date thereof, and, to the extent the same is
not paid as provided herein, hereby expressly authorizes the Lenders to make
such payments, which, if made, shall be deemed Indebtedness under the
Notes.

     

    
      
        
        

      

      
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    Section 3.26    No
Investments.

     

    The
Company shall not, and shall not permit any Subsidiary to, make or suffer to
exist any Investments or commitments therefor, other than Investments made in
the ordinary course of business.  “Investment” means,
with respect to any Person, all investments in any other Person, whether by way
of extension of credit, loan, advance, purchase of stock or other ownership
interest (other than ownership interests in such Person), bonds, notes,
debentures or other securities, or otherwise, and whether existing on the date
of this Agreement or thereafter made, but such term shall not include the cash
surrender value of life insurance policies on the lives of officers or
employees, excluding amounts due from customers for services or products
delivered or sold in the ordinary course of business.

     

    Section 3.27    Opinions.

     

    For so
long as either Lender owns any Notes or Securities, the Company will provide, at
the Company’s expense, such legal opinions in the future as are reasonably
necessary for the issuance and resale of the Common Stock issuable upon exercise
of the Warrants pursuant to an effective registration statement, Rule 144 or an
exemption from registration.  In the event that Common Stock is sold
in a manner that complies with an exemption from registration, the Company will
promptly instruct its counsel (at its expense) to issue to the transfer agent an
opinion permitting removal of the legend (indefinitely, if more than one year
has elapsed from the Closing Date, or to permit sale of the shares if pursuant
to the other provisions of Rule 144).

     

    Section 3.28    Acquisition of
Assets.

     

    In the
event the Company or any Subsidiary acquires any assets or other properties,
such assets or properties shall constitute a part of the Collateral (as defined
in the Security Agreement) and the Company shall take all action necessary to
perfect the Lenders’ security interests in such assets or
properties.

     

    Section 3.29    Registration
Rights.

     

    If the
Company shall determine to prepare and file with the Commission a registration
statement (a “Registration
Statement”) relating to an offering for its own account or the account of
others under the Securities Act of any of its equity securities, other than on
Form S-4 or Form S-8 (each as promulgated under the Securities Act), or their
then equivalents, relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit plans, then
the Company shall send to the Lenders a written notice of such determination
and, if within ten days after the date of such notice, either Lender shall so
request in writing, the Company shall include in such Registration Statement all
or any part of the Warrant Shares as either Lender requests to be registered so
long as such Warrant Shares are proposed to be disposed in the same manner as
those set forth in the Registration Statement.  The Company shall use
its best efforts to cause any Registration Statement to be declared effective by
the Commission as promptly as is possible following it being filed with the
Commission and to remain effective until all Warrant Shares subject thereto have
been sold or may be sold without limitations as to volume or the availability of
current public information under Rule 144. 

     

    
      
        
        

      

      
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     All
fees and expenses incident to the performance of or compliance with this Section
3.29 by the Company shall be borne by the Company whether or not any Warrant
Shares are sold pursuant to the Registration Statement.  The Company
shall indemnify and hold harmless each Lender, the officers, directors, members,
partners, agents, brokers, investment advisors and employees of each of them,
each person who controls each Lender (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), and the officers, directors,
members, shareholders, partners, agents and employees of each such controlling
person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as
incurred, arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
prospectus included therein or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading or (2) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act or any
state securities law, or any rule or regulation thereunder, in connection with
the performance of its obligations under this Section 3.29, except to the
extent, but only to the extent, that such untrue statements or omissions
referred to in (1) above are based solely upon information regarding such Lender
furnished in writing to the Company by such Lender expressly for use
therein.

     

    Section 3.30    Delivery of Off–Take
Agreement.  The Lenders and the Company shall negotiate in good
faith an off-take agreement (the “Off-Take Agreement”)
on commercially reasonable terms.

     

    Section 3.31    Notices of Certain
Events.  The Company shall promptly notify the Lenders of any
event or events that have had or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company.

     

    Section 3.32    Indebtedness to
Affiliates.   The Company shall not make any payment on
any indebtedness owed to officers, directors or affiliates.

     

    Section 3.33    Management.  A.
Scott Dockter and James Kluber shall at all times remain as active executive
officers of the Company.

     

    ARTICLE
IV

     

    CONDITIONS

     

    Section 4.1    Conditions Precedent to the
Obligation of the Company to Close and to Sell the Securities at Each
Closing.

     

    The
obligation hereunder of the Company to close and issue and sell the applicable
Notes and Warrants to the Lenders at each Closing is subject to the satisfaction
or waiver, at or before such Closing of the conditions set forth
below.  These conditions are for the Company’s sole benefit and may be
waived by the Company at any time in its sole discretion.

     

    
      
        
        

      

      
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    (a)    No
Injunction.  No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.

     

    (b)    Delivery of Applicable
Advance.  Each Lender shall have advanced the funds as payment
for the purchase price of its applicable Notes (and in the case of the First
Closing, the Warrants) on the date of such Closing.

     

    (c)    Delivery of Transaction
Documents.  The Transaction Documents to which each of the
Lenders is a party shall have been duly executed and delivered by such Lender to
the Company.

     

    Section
4.2    Conditions Precedent to the
Obligation of the Lenders to Close at Each Closing.

     

    The
obligation hereunder of the Lenders to purchase the Notes and Warrants and
consummate the transactions contemplated by this Agreement is subject to the
satisfaction or waiver, at or before each Closing, of each of the conditions set
forth below.  These conditions are for each Lender’s sole benefit and
may be waived by the Lenders at any time in their sole discretion.

     

    (a)    Accuracy of the Company’s
Representations and Warranties.  Each of the representations
and warranties of the Company in this Agreement and the other Transaction
Documents shall be true and correct in all material respects as of the date of
such Closing, except for representations and warranties that speak as of a
particular date, which shall be true and correct in all material respects as of
such date.

     

    (b)    Performance by the
Company.  The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the date of such Closing.

     

    (c)    No Suspension,
Etc.  Trading in the Common Stock shall not have been suspended
by the Commission, the OTC Bulletin Board or the Toronto Stock Exchange, and, at
any time prior to the Closing Date, trading in securities generally as reported
by Bloomberg Financial Markets (“Bloomberg”) shall not
have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by Bloomberg, or on the New
York Stock Exchange, nor shall a banking moratorium have been declared either by
the United States or New York State authorities, nor shall there have occurred
any material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on, or any
material adverse change in any financial market which, in each case, in the
judgment of the Lenders, makes it impracticable or inadvisable to purchase the
Securities.

     

    (d)    No
Injunction.  No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.

     

    
      
        
        

      

      
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    (e)    No Proceedings or
Litigation.  No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any Subsidiary, or any of the officers, directors or affiliates
of the Company or any Subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions, which individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.

     

    (f)    Opinions of
Counsel.  The Lenders shall have received an opinion of counsel
to the Company, dated the date of the applicable Closing, substantially in the
form of Exhibit
G hereto, with such exceptions and limitations as shall be reasonably
acceptable to counsel to the Lenders.  Further, on the First Closing,
the Lenders shall have received (i) an opinion of Nevada counsel to the Company
as to the title of its mining and real property assets and other related matters
in form and substance satisfactory to the Lenders and (ii) an opinion of Nevada
counsel to the Company as to the validity and enforceability of the Mortgage in
form and substance satisfactory to the Lenders.

     

    (g)    Notes and Warrants;
Transaction Documents.  At or prior to the applicable Closing,
the Company shall have delivered to the Lenders the applicable Notes and, in the
case of the First Closing, the Warrants; the Company shall have duly executed
and delivered the other Transaction Documents to the Lenders.

     

    (h)    Secretary’s
Certificate.  The Company and each Subsidiary shall have
delivered to the Lenders a secretary’s certificate, dated as of such Closing, as
to (i) the resolutions adopted by the Board of Directors approving the
transactions contemplated hereby, (ii) the Certificate of Incorporation, (iii)
the Bylaws, each as in effect at the Closing, and (iv) the authority and
incumbency of the officers of the Company executing the Transaction Documents
and any other documents required to be executed or delivered in connection
therewith.

     

    (i)    Officer’s
Certificate.  On the date of such Closing, the Company shall
have delivered to the Lenders a certificate signed by an executive officer on
behalf of the Company, dated as of the date of such Closing, confirming the
accuracy of the Company’s representations, warranties and covenants as of such
date and confirming the compliance by the Company with the conditions precedent
set forth in paragraphs (a)-(e) and (k) of this Section 4.2 as of the date of
such Closing.

     

    (j)    Mortgaged Land and
Premises.  As of the date of the First Closing, the Mortgage
shall have been duly recorded in the land records of those recording offices set
forth on Schedule
4.2(j) and shall be a first priority lien on the land and premises
described therein.

     

    (k)    Material Adverse
Effect.  No Material Adverse Effect shall have occurred since
January 31, 2008.

     

    (l)    Payment of Lenders’
Expenses.  The Company shall have paid the fees and expenses
described in Section 7.1 of this Agreement.

     

    (m)    UCC Financing
Statements.  On or prior to the date of the First Closing, the
Company shall have filed (or authorized the filing of) all UCC and similar
financing statements in form and substance satisfactory to Platinum at the
appropriate offices to create a valid and perfected security interest in the
Collateral (as defined in the Security Agreement).

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (n)    Consents.  The
Company shall have obtained all consents, approvals, or waivers from all
governmental authorities, third parties and Company securityholders necessary
(i) for the execution, delivery and performance of this Agreement and the
Transaction Documents and the transactions contemplated hereby and thereby and
(ii) to not, except as set forth on Schedule 4.2(n),
trigger any preemptive rights, rights of first refusal, put or call rights or
obligations, anti-dilution rights or similar rights that any holder of the
Company’s securities may have with respect to the execution, delivery and
performance of this Agreement and each of the Transaction Documents and all
transactions contemplated hereby and thereby, all without material cost or other
adverse consequences to the Company.

     

    (o)    Additional Deeds Of
Trust.  The Company shall have delivered to the Lenders an
additional Deed of Trust for each property set forth on Schedule 4.2(o) free
and clear of all Liens and together with such searches and opinions reasonably
requested by Platinum.

     

    (p)    Additional Conditions to
Subsequent Closings.  In the case of each Subsequent Closing,
each Lender’s obligation to close and advance the funds pursuant to Section 1.1
hereof, at such Subsequent Closing is subject to the satisfaction of following
conditions as of the date of such Subsequent Closing:

     

    (i) No
Default.  No event has occurred and is continuing, or would
result from such advance or from the application of the proceeds therefrom,
which constitutes a default hereunder or Event of Default (as defined in the
Notes) or an event which, with the expiration of time or the giving of notice,
or both, would constitute a default hereunder or an Event of
Default;

     

    (ii) Legality as to Company as
Borrower.  It shall not be unlawful for the Company to pay or
perform any of its agreements or obligations under any of the Transaction
Documents;

     

    (iii)  No Subsequent
Lien.  No subsequent Lien has been granted with respect to any
collateral securing the Company’s obligations under the Transaction Documents,
except Permitted Encumbrances; and

     

    (iv) Evidence of Sufficient
Production.  The Company shall have delivered a certificate,
signed by its chief executive officer and chief accounting officer, certifying
the production of in excess of 3,000 ounces of gold by the Company at “Relief
Canyon” mine for the month immediately preceding the date of the Company’s
written request pursuant to Sections 1.1(c), (d) or (e), as the case may be,
which certificate shall be accompanied by invoices and/or evidence of the sale
of such gold in form and substance reasonably satisfactory to Platinum in its
discretion.

     

    (v) Closing Conditions
Letter.  With respect to the Second Closing, the Company shall
have satisfied all of the conditions set forth in that certain Closing
Conditions Letter dated as of the date hereof by and between the Company and the
Lenders in accordance with the terms and conditions set forth in such
letter.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    ARTICLE
V

     

    CERTIFICATE
LEGEND

     

    Section 5.1    Legend.

     

    Each
certificate representing the Securities shall be stamped or otherwise imprinted
with a legend substantially in the following form (in addition to any legend
required by applicable state securities or “blue sky” laws):

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR FIRSTGOLD CORP. SHALL HAVE RECEIVED AN OPINION OF
COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER
THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

     

    The
Company agrees to issue or reissue certificates representing any of the Warrant
Shares, without the legend set forth above if at such time, prior to making any
transfer of the Warrant Shares, the holder thereof shall give written notice to
the Company describing the manner and terms of such transfer and removal as the
Company may reasonably request, and (x) such Warrant Shares have been registered
for sale under the Securities Act and the holder is selling such shares and is
complying with its prospectus delivery requirement under the Securities Act, (y)
the holder is selling such Warrant Shares in compliance with the provisions of
Rule 144 or other exemption from registration or (z) the provisions of paragraph
(b)(1)(i) of Rule 144 apply to such shares.

     

    ARTICLE
VI

     

    INDEMNIFICATION

     

    Section 6.1    General
Indemnity.

     

    The
Company agrees to indemnify and hold harmless each Lender (and its respective
directors, officers, members, partners, affiliates, agents, successors and
assigns) from and against any and all losses, liabilities, deficiencies, costs,
damages and expenses (including, without limitation, reasonable attorneys’ fees,
charges and disbursements) incurred by such Lender as a result of any inaccuracy
in or breach of the representations, warranties or covenants made by the Company
herein.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    Section 6.2    Indemnification
Procedure.

     

    Any party
entitled to indemnification under this Article VI (an “indemnified party”)
will give written notice to the indemnifying party of any matter giving rise to
a claim for indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VI except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice.  In case any such action, proceeding or claim is brought
against an indemnified party in respect of which indemnification is sought
hereunder, the indemnifying party shall be entitled to participate in and,
unless in the reasonable judgment of the indemnifying party a conflict of
interest between it and the indemnified party exists with respect to such
action, proceeding or claim (in which case the indemnifying party shall be
responsible for the reasonable fees and expenses of one separate counsel for the
indemnified parties), to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party.  In the event that the
indemnifying party advises an indemnified party that it will contest such a
claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such person of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or claim.  In any
event, unless and until the indemnifying party elects in writing to assume and
does so assume the defense of any such claim, proceeding or action, the
indemnified party’s costs and expenses arising out of the defense, settlement or
compromise of any such action, claim or proceeding shall be losses subject to
indemnification hereunder.  The indemnified party shall cooperate
fully with the indemnifying party in connection with any negotiation or defense
of any such action or claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the indemnified party
which relates to such action or claim.  The indemnifying party shall
keep the indemnified party fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto.  If the
indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense.  The indemnifying party
shall not be liable for any settlement of any action, claim or proceeding
effected without its prior written consent.  Notwithstanding anything
in this Article VI to the contrary, the indemnifying party shall not, without
the indemnified party’s prior written consent, settle or compromise any claim or
consent to entry of any judgment in respect thereof which imposes any future
obligation on the indemnified party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
indemnified party of a release from all liability in respect of such
claim.  The indemnification obligations to defend the indemnified
party required by this Article VI shall be made by periodic payments of the
amount thereof during the course of investigation or defense, as and when bills
are received or expense, loss, damage or liability is incurred, so long as the
indemnified party shall refund such moneys if it is ultimately determined by a
court of competent jurisdiction that such party was not entitled to
indemnification.  The indemnity agreements contained herein shall be
in addition to (a) any cause of action or similar rights of the indemnified
party against the indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject to pursuant to the law.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    ARTICLE
VII

     

    MISCELLANEOUS

     

    Section 7.1    Fees and
Expenses.

     

    The
Company shall pay the costs, fees and expenses of the Lenders incurred in
connection with the transactions contemplated by the Transaction Documents,
including reasonable diligence and legal fees and expenses.  In
addition, the Company shall pay (i) any fees and expenses relating to the title
opinions with respect to the property described in the Deed of Trust and the
Mortgage, (ii) all reasonable fees and expenses incurred by the Lenders in
connection with the drafting, negotiation and execution of this Agreement and
the transactions contemplated hereby estimated to be $75,000 (of which, as of
the date of this Agreement, the Company has previously paid $25,000), and (iii)
all reasonable fees and expenses incurred by the Lenders in connection with the
enforcement of this Agreement or any of the other Transaction Documents,
including, without limitation, all reasonable attorneys’ fees and
expenses.

     

    Section 7.2    Specific Performance;
Consent to Jurisdiction; Venue.

     

    (a)    The
Company and each of the Lenders acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement or the
other Transaction Documents were not performed in accordance with their specific
terms or were otherwise breached.  It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement or the other Transaction Documents
and to enforce specifically the terms and provisions hereof or thereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity.

     

    (b)    The
parties agree that venue for any dispute arising under this Agreement will lie
exclusively in the state or federal courts located in New York County, New York,
and the parties irrevocably waive any right to raise forum non conveniens or any
other argument that New York is not the proper venue.  The parties
irrevocably consent to personal jurisdiction in the state and federal courts of
the state of New York.  The Company and each of the Lenders consent to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing in this Section 7.2
shall affect or limit any right to serve process in any other manner permitted
by law.  The Company and the Lenders hereby agree that the prevailing
party in any suit, action or proceeding arising out of or relating to the
Securities, this Agreement or the other Transaction Documents, shall be entitled
to reimbursement for reasonable legal fees from the non-prevailing
party.  The parties hereby waive all rights to a trial by
jury.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    Section 7.3    Intent to Limit Changes to
Maximum Lawful Rights.

     

    Anything
in this Agreement, the Notes or any of the other Transaction Documents to the
contrary notwithstanding, in no event whatsoever, whether by reason of
advancement of proceeds of the Notes, acceleration of the maturity of the unpaid
balance of the Notes or otherwise, shall the interest and other charges agreed
to be paid to the Lenders for the use of the money advanced or to be advanced
hereunder exceed the maximum amounts collectible under applicable laws in effect
from time to time.  It is understood and agreed by the parties that,
if for any reason whatsoever the interest or loans charges paid or contracted to
be paid by the Company in respect of the indebtedness evidenced by the Notes
shall exceed the maximum amounts collectible under applicable laws in effect
from time to time, then ipso facto, the obligation to pay such interest and/or
loans charges shall be reduced to the maximum amounts collectible under
applicable laws in effect from time to time, and any amounts collected by the
Lenders that exceed such maximum amounts shall be applied to the reduction of
the principal balance of the indebtedness evidenced by the Notes and/or refunded
to the Company so that at no time shall the interest or loan charges paid or
payable in respect of the indebtedness evidenced by the Notes exceed the maximum
amounts permitted from time to time by applicable law.

     

    Section 7.4    Entire Agreement;
Amendment.

     

    This
Agreement and the Transaction Documents contain the entire understanding and
agreement of the parties with respect to the matters covered hereby and, except
as specifically set forth herein or in the other Transaction Documents, neither
the Company nor either Lender makes any representation, warranty, covenant or
undertaking with respect to such matters, and they supersede all prior
understandings and agreements with respect to said subject matter, all of which
are merged herein.  No provision of this Agreement may be waived or
amended other than by a written instrument signed by the Company and the
Lenders.  Any amendment or waiver effected in accordance with this
Section 7.4 shall be binding upon the Lenders (and their assigns) and the
Company.

     

    Section 7.5    Notices.

     

    Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery by telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The
addresses for such communications shall be:

     

    
      	
              If
      to the Company:

            	
              Firstgold
      Corp.

              3108
      Ponte Morino Drive, Suite 210

              Cameron
      Park, CA  95682

              Attn:  Chief
      Executive Officer

              Tel:
      (530) 677-5974

              Fax:
      (530) 677-7626

            
	 
      	 
      
	
              with
      copies (which copies

              shall
      not constitute notice

              to
      the Company) to:

            	
              Duncan
      Linn & Wade

              2261
      Lava Ridge Court

              Roseville,
      CA  95661

              Attn:  Roger
      D. Linn

              Tel:  (916)
      797-7436

              Fax:  (916)
      797-3626

            


    

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    
      	 
      	 
      
	
              If
      to Platinum:

            	
              Platinum
      Long Term Growth, LLC

              152
      West 57th
      Street, 4th
      Floor

              New
      York, NY 10019

              Attn:  Mark
      Mueller

              Tel:  (212)
      582-2222

              Fax:
      (212) 582-2424

            
	 
      	 
      
	
              If
      to Lakewood:

            	
              Lakewood
      Group LLC

              152
      West 57th
      Street, 54th
      Floor

              New
      York, NY 10019

              Attn:
      Shoshana Englander

              Tel:  (212)
      582-0500

              Fax:
      (212) 582-2424

            
	 
      	 
      
	
              with
      copies (which copies

              shall
      not constitute notice

              to
      either Lender) to:

            	
              Eliezer
      M. Helfgott, Esq.

              Blank
      Rome LLP

              405
      Lexington Avenue

              New
      York, NY 10174

              Tel:
      (212) 885-5431

              Fax:
      (917) 332-3065

            
	 
      	 
      


    

    Any party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other party hereto.

     

    Section 7.6    Waivers.

     

    No waiver
by either party of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right accruing to it
thereafter.

     

    Section 7.7    Headings.

     

    The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose and
shall not be deemed to limit or affect any of the provisions
hereof.

     

    Section 7.8    Successors and
Assigns.

     

    This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and assigns.  After the Closing, the assignment by a
party to this Agreement of any rights hereunder shall not affect the obligations
of such party under this Agreement.  Either Lender may assign the
Securities and its rights under this Agreement and the other Transaction
Documents and any other rights hereto and thereto without the consent of the
Company.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    Section 7.9    No Third Party
Beneficiaries.

     

    This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.

     

    Section 7.10   Governing
Law.

     

    This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York, without giving effect to any of the conflicts of
law principles which would result in the application of the substantive law of
another jurisdiction.  This Agreement shall not be interpreted or
construed with any presumption against the party causing this Agreement to be
drafted.

     

    Section 7.11   Survival.

     

    The
representations and warranties of the Company and the Lenders shall survive the
execution and delivery hereof and the Closing until the third anniversary of the
Closing Date; the agreements and covenants set forth in Articles I, III, V, VI
and VII of this Agreement shall survive the execution and delivery hereof and
Closing hereunder.

     

    Section 7.12   Publicity.

     

    The
Company agrees that it will not disclose, and will not include in any public
announcement, the names of either Lender without the consent of such Lender,
which consent shall not be unreasonably withheld or delayed, or unless and until
such disclosure is required by law, rule or applicable regulation and then only
to the extent of such requirement.

     

    Section
7.13   Counterparts.

     

    This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and shall become effective
when counterparts have been signed by each party and delivered to the other
parties hereto, it being understood that all parties need not sign the same
counterpart.

     

    Section
7.14    Severability.

     

    The
provisions of this Agreement are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement and this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    Section
7.15     Further
Assurances.

     

    From and
after the date of this Agreement, upon the request of either Lender or the
Company, the Company and the Lenders shall execute and deliver such instruments,
documents and other writings as may be reasonably necessary or desirable to
confirm and carry out and to effectuate fully the intent and purposes of this
Agreement and the other Transaction Documents.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, the
parties hereto have caused this Note and Warrant Purchase Agreement to be duly
executed by their respective authorized officers as of the date first above
written.

     

    
      	 
      
	
              FIRSTGOLD
      CORP.

            
	 
      
	
              By:

            	
              /s/
      S.C. Akerfeldt

            
	 
      	
              Name:
      S.C. Akerfeldt

            
	 
      	
              Title:
      CEO

            
	 
      
	
              PLATINUM
      LONG TERM GROWTH, LLC

            
	 
      
	
              By:

            	
              /s/
      Mark Nordlicht

            
	 
      	
              Name:
      Mark Nordlicht

            
	 
      	
              Title:
      General Manager

            
	 
      
	
              LAKEWOOD
      GROUP LLC

            
	 
      
	
              By:

            	
              /s/
      Mark Mueller

            
	 
      	
              Name:
      Mark Mueller

            
	 
      	
              Title:
      Managing Member

            
	 
      


    

    
 

     

     

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    Firstgold
Corp.

    
      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedules
2.1(b)

      


       

      None.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedules
2.1(c)(i)(ii)(iii)(iv)(v)

      


      


      Schedules 2.1(c)(i)
Authorized and outstanding common shares

      Authorized
Common Shares – 250,000,000

      Outstanding
Common Shares – 130,845,543

      


      Schedules 2.1(c)(ii)
Registration Rights

      Firstgold
currently has 2 current registration statements filed with the SEC and is
obligated to keep these registrations current.  The 1st
registration statement covers 8,375,000 common shares and was amended on July
24, 2008.  The second registration statement covers 20,635,588 common
shares and was amended on July 23, 2008.

      


      Currently
there are $650,000 in convertible debentures issued on October 10, 2006 that are
outstanding and can be converted into 1,444,444 common
shares.  Currently there is a $1,100,000 convertible debenture issued
May 1, 2008 that can be converted into 1,100,000 shares of common stock; however
this debenture will be repaid out of proceeds of the First Closing.

      


      Schedules 2.1(c)(iii)
Outstanding Warrants and Options to Purchase Common Stock

      Please
see attached schedule of these items.

      


      Schedules 2.1(c)(iv)
Anti-dilution Rights

      See
Schedule 2.(c)(ii) above for details on keeping the 2 effective registration
statements current.

      


      Anti-dilution
features exist in all warrants for standard clauses covering stock dividends,
stock splits, etc.  Additionally, 4,625,000 warrants related to the 2
financings with Yorkville Advisors (Cornell Capital) and the October 10, 2006
financing have price protection features that would cause their warrants to be
adjusted downward to the same price as the warrant pricing from this financing
if it is below $0.45.  The price protection stays in place until the
warrants are exercised or expire.

      


      Schedules 2.1(c)(v) Voting
Trust Agreements

      In
conjunction with the Company’s listing on the Toronto Stock Exchange Scott
Dockter placed all shares and warrants owned or controlled by him into a voting
trust with Equity Trust and Transfer Company in Toronto.

       

       

       

       

       

      
 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
2.1(g) Schedule of Subsidiaries

      


       

      Omnirock,
Inc.

      This is a
wholly owned, subsidiary of the Company, created in June 2008, incorporated in
Nevada and will pursue mining of non-precious metals and industrial minerals
which the Company has on its existing properties.  

       

       

      
 

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
2.1(i) Undisclosed Liabilities

       

      
Since
January 31, 2008 the Company has incurred the following liabilities not to be
considered in the normal course of business.

      


      A
$1,100,000 convertible debenture that was funded on May 1, 2008.

      


      A
$250,000 note payable that was funded on July 9, 2008.

      


      It is
anticipated that the Company will enter into a purchase money mortgage for
$315,000 on a building in Lovelock, NV after the First Closing.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
2.1(j)

      


       

      None.

       

       

      
 

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
2.1(k) Indebtedness

       

      


      	
          $200,685
  Citicapital Commercial Corporation Note Payable November, 2007, lien
  filed

        
	
          $57,708
  Citicapital Commercial Corporation Note Payable June 2008, original titles
  held

        
	
          $423,000  Caterpillar
  Financial Corporation May 2008, lien filed

        
	
          $40,000
  Caterpillar Financial Corporation November 2006, lien filed

        
	
          $68,460
  AFCO financing of D&O insurance premium February 2008

        
	
          $55,966
  AICCO financing of general liability insurance premium April 2008

        
	
          $650,000
  Convertible Debentures issued October 2006

        
	
          $1,100,000
  Secured Convertible Debenture issued May 2008

        
	
          $250,000
  Note Payable issued July 2008

        
	
          $312,500
  Mortgage Note Payable to be closed in August 2008.

        


       

       

       

      
 

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
2.1(l) Liens on Assets & Mining Claims

       

      
Liens on
Assets

      	
          The
  $1,100,000 Convertible debenture has a lien on all assets of the
  Company.

        
	
          The
  Citicapital and Caterpillar loans have liens on the specific assets
  financed

        
	
          Citicapital

        
	
          $200,685
  – 2 rectifiers; hurricane booster & compressor; boomlift

        
	
          $57,700
  – 2 Dodge pickups.

        
	
          Caterpillar

        
	
          $423,000
  – 14B grader

        
	
          $40,000
  – Skid Steer

        


      


      Mining Claims and
Leases

      	
          Relief
  Canyon, such mining claims as more specifically described in the attached
  documents covering 146 claims including 120 mill site claims and 26 unpatented
  mining claims.

        
	
          Antelope
  Peak, such mining claims as more specifically described in the attached
  Mineral Lease Agreement between Firstgold Corp. and Dalton Livestock and
  Winchell Ranch.

        
	
          Horse
  Creek such mining claims as more specifically described in the attached
  Mineral Lease Agreement between Firstgold Corp. and Ken Tipton, covering
  approximately 4200 acres and 199 claims.

        
	
          Honorine
  such mining claims as more specifically described in the attached Mineral
  Lease Agreement between Firstgold Corp. and Steve and Honorine Patterson
  Family Trust, covering approximately 3300 acres and 40 claims.

        
	
          Fairview
  Hunter such mining claims as more specifically described in the attached
  Mineral Lease Agreement between Firstgold Corp. and Randall Stoeberl, covering
  approximately 2300 acres and 115 claims.

        


       

       

       

       

       

      
 

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
2.1(m) Litigation

      


       

      On
September 24, 2007, a complaint was served on Firstgold by Swartz Private
Equity, LLC.  The complaint was filed in the District Court for the
Western District of New York (Case No. 07CV6447).  In the complaint,
plaintiff alleges that pursuant to an Investment Agreement dated October 4,
2000, and entered into with Firstgold’s former management, it is entitled to the
exercise of certain warrants in the amount of 1,911,106 shares of Firstgold
common stock or the equivalent cash value of $0.69 per share and a termination
fee of $200,000.  Firstgold filed an answer to the complaint on
December 3, 2007 and expects to vigorously defend this action.  The
lawsuit is now in the discovery phase.

       

      On
January 30, 2008, a complaint was served on Firstgold by Park Avenue Consulting
Group, Inc.  The complaint was filed in the Supreme Court of the State
of New York but was subsequently removed to the Federal District Court for the
Southern District of New York (Case No. 08CV01850).  In the complaint,
plaintiff alleges that pursuant to a Retainer Agreement entered into on
September 1, 2000 and an Addendum thereto entered into on September 7, 2000, it
is entitled to the issuance of warrants to purchase 1,000,000 shares of
Firstgold stock, a monthly retainer fee of 50,000 shares of Firstgold stock and
a monthly cash retainer fee, a $50,000 finder’s fee, and other damages to be
proven at trial.  Firstgold filed an Answer on April 15, 2008 and on
May 5, 2008 filed a Counterclaim seeking reimbursement of all costs of this
lawsuit.  Firstgold expects to vigorously defend this
action.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
2.1(o)

       

       

      None.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
2.1(t)

      


       

      There
exists between the Company and ASD Aviation, Inc. an Aircraft Time Sharing
Agreement.  The Agreement among other items allows the Company to
utilize an aircraft owned by ASD Aviation at a rate of $200 per hour plus direct
costs.  The Agreement is for a term of 10 years from December 1,
2006.  The Company originally prepaid for $140,000 of aircraft
usage.

       

       

      
 

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
2.1(v) Employment Agreements

      


       

      The
Company has employment agreements with the following executive
officers:

      


      Stephen
C. Akerfeldt, Chief Executive Officer

      A. Scott
Dockter, Chief Operating Officer

      James W.
Kluber, Chief Financial Officer

       

       

       

      
 

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
2.1(w)(i)(ii)(ix)

      


       

      Schedule 2.1(w)(i) Stock,
Warrant and Option Issuances since January 31, 2008

      The
Company has issued the following since January 31, 2008

      	
          12,835,127
  common shares and 6,417,564 warrants from the sale of units at $0.65 per unit
  plus 2,258,123 broker warrants

        
	
          450,000
  common shares from the exercise of warrants

        
	
          127,999
  common shares from the conversion of a note payable and accrued
  interest

        
	
          $1,100,000
  convertible debenture with 1,100,000 warrants exercisable at
$1.00

        
	
          $250,000
  note payable with 500,000 warrants exercisable at $0.50

        
	
          951,038
  stock options granted to employees ranging in price from $0.50 to
  $0.70

        


      


      Schedule 2.1(w)(ii)
Borrowings in Excess of $100,000

      The
Company has borrowed the following since January 31, 2008

      	
          $1,100,000
  convertible debenture with 1,100,000 warrants exercisable at
$1.00

        
	
          $250,000
  note payable with 500,000 warrants exercisable at $0.50

        


      


      
        Schedule 2.1(w)(ix) Capital
Expenditures in Excess of $100,000

      

      The
Company has expended in excess of $100,000 on the following since January 31,
2008

      	
          Relief
  Canyon Process Plant

        
	
          Relief
  Canyon Crushing System

        
	
          New
  Laboratory in Lovelock

        


       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
2.1(z)

      


       

      None.

       

       

       

      
 

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
2.1(bb) Transfer Agent Information

      


       

      United
States

      Transfer
Online Inc.

      317 SW
Alder St., 2nd
Floor

      Portland,
OR 97204

      Lori
Livingston, President

      Aaron
White, Account Executive, email aaron@transferonline.com

      Phone:
503-227-2950

      Fax:
503-227-6874

      Transfer
Online Inc. is a DTC participant.

      


      
        Canada

      

      
        Equity
Transfer and Trust Company

      

      
        200
University Avenue, Suite 400

      

      
        Toronto,
ON M5H 4H1

      

      
        Stephen
Headford, Executive Vice President

      

      
        Michael
Lee, Account Manager, email mlee@equitytransfer.com

      

      
        Phone:
416-361-0930

      

      
        Fax:
416-361-0470

      

      Equity
Transfer and Trust is not a DTC participant.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
2.1(dd)

      


       

      None.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
2.1(ee) Certain Fees

      


       

      Brokers

      	
          Casimir
  Capital L. P. – 5% commission on gross proceeds funded
546
  Fifth Ave., 5th Floor
New
  York, NY 10036
Attention:
  Richard Sands

        


      	
          Britton
  Hill Partners Limited – 2% commission on gross proceeds funded
390 Bay
  Street, Suite 802
Toronto,
  Ontario M5H-2Y2
Attention:
  Mark Wade

        


       

       

       

       

      
 

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
3.15 Permitted Liens

       

      	
          $200,685
  Citicapital Commercial Corporation Note Payable November, 2007, lien
  filed

        
	
          $57,708
  Citicapital Commercial Corporation Note Payable June 2008, original titles
  held

        
	
          $423,000  Caterpillar
  Financial Corporation May 2008, lien filed

        
	
          $40,000
  Caterpillar Financial Corporation November 2006, lien
filed

        


       

       

      
 

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
3.16 Permitted Indebtedness

       

      


      	
          $200,685
  Citicapital Commercial Corporation Note Payable November, 2007, lien
  filed

        
	
          $57,708
  Citicapital Commercial Corporation Note Payable June 2008, original titles
  held

        
	
          $423,000 Caterpillar
  Financial Corporation May 2008, lien filed

        
	
          $40,000
  Caterpillar Financial Corporation November 2006, lien
filed

        


       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
3.19 Amounts owing to Officers, Directors and Employees Except in the Normal
Course of Business

      


       

      None,
except for the Aircraft Time Sharing Agreement identified in
3.19(iv).

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
4.2(j) Recording Offices

       

      


      	
          Relief
  Canyon – Pershing County Recorder’s Office

        
	
          Lovelock
  Office Building and Lot - Pershing County Recorder’s Office

        
	
          Antelope
  Peak – Elko County Recorder’s Office

        
	
          Horse
  Creek – Humboldt County Recorder’s Office

        
	
          Honorine
  – Humboldt County  Recorder’s Office

        
	
          Fairview-Hunter
  – Churchill County Recorder’s Office

        


       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      Schedule
4.2(n) Preemptive Rights

       

      


      	
          4,625,000
  outstanding warrants from prior financings with Yorkville Advisors (Cornell
  Capital)

        
	
          746,783
  outstanding warrants from the October 10, 2006 convertible
  debentures.

        


       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Firstgold
Corp.

      August 1,
2008

      Note and
Warrant Purchase Agreement

      
        Schedule
4.2(o) Deeds of Trust

         

      

      


      	
          Relief
  Canyon Mine and associated claims

        
	
          Lovelock
  Office Building and Lot

        
	
          Antelope
  Peak

        
	
          Horse
  Creek

        
	
          Honorine

        
	
          Fairview
  Hunter